The recent acquisition of the Netscape/AOL patent portfolio reminded me that an update on Mozilla’s patent strategy is long overdue. This post is about what we’ve done and what we could/should do in the future.

As you may have seen, there’s been a lot of patent litigation activity lately. The Yahoo suit against Facebook is one of the most surprising – at least to me. And the US Supreme Court just recently weighed in to re-affirm a long held axiom of patent jurisprudence that laws of nature are not patentable subject matter, so the judiciary is getting more active as well.

What’s driving the increase of patent activity? There are numerous drivers in my view including increased competition in the mobile space, the desire for competitive advantage particularly if a company is struggling in the market, and demands for incremental license revenues. Invariably, patent portfolios become more attractive tools for revenue and market competition when a business is not doing well or threatened.

The traditional strategy has been for each company to develop the largest possible patent portfolio to act as a deterrent against potential plaintiffs. This is known as a defensive approach. Others make no such claim at all, and still others do a bit of both depending on the circumstances. For early stage companies and start-ups, patent rights may also be important. If the business fails in the market, IP rights may turn out to be the most valuable asset for investors.

I personally struggle with the effectiveness of “build a big patent pool” as a one size fits all approach. It may not work if you’re way behind in the game or even conflicted about software patents. Also, if done organically, it simply takes too long. In other settings it may however make perfect sense, especially with enough resources and sufficient inventive material that is relevant to your competitors. I got to do this for a few years in my first in-house counsel job working for Mitchell Baker long ago where I was tasked with creating the initial Netscape patent portfolio.

So far Mozilla has not adopted the traditional strategy. A while back we made an exception to file four patent applications on some novel digital audio and video compression codecs co-invented with a contributor at the time. We assigned those applications to xiph.org, a non-profit focused on open video and audio codecs. The assignment included a defensive patent provision which prevents the patent from being used offensively. One of those applications has been published for examination as part of the standard USPTO patent application process. We believe that these applications may help in standards settings so we could achieve a better open standard for audio codecs. For better or worse, in the standards bodies participants use their IP to influence the standards and without some leverage, you’re left only with moral and technical arguments. We’ll see if our theory plays out in the future.

We haven’t filed other applications yet, but I don’t think the past should necessarily dictate the future. I can imagine many places where inventive developments are occurring that have strategic value to the industry, and where we want those protocols, techniques, and designs to stay open and royalty-free to the extent they are essential parts of a robust web platform. Ofcourse filing patent applications is one possible technique, but at those strategic intersections, I think we should entertain filing patent applications as one tool in our overall strategy.

In addition to patent filing strategies, there are other things we could do including:

Building out a robust defensive publication program. IBM wrote the book on this, maybe its time to make source code publications work the same way.

Developing an ongoing working prior art system available for defendants. We worked on a version of this a few years back, but the urgent beat out the important and no progress has been made since then.

Pooling patents with other like minded groups into safe pro-web entities with defensive protections. The pools need to be relevant to competitive threats for this to have value in my view.

Creating other disincentives to the offensive use of patents (similar to the MPL defensive patent provision) but relevant to larger parts of the web.

Sometime mid-year, I’d like to have a broader discussion to brainstorm further and prioritize efforts. Nonetheless, I’m pretty confident that given the changing landscape and markets, we’ll need to play in this domain more significantly one way or the other.

As reported in the news this week, Microsoft acquired some 800 patents from AOL for a billion dollars. A few people have asked what this means for Mozilla. At present, I don’t believe that the acquisition poses an immediate danger to Mozilla.

There are many possible motivations for the acquisition including reducing exposure, preventing others from obtaining the patents, increasing your portfolio size and quality, using them for cross-licensing, or even patent license programs. We’ll never know for sure, but viewing this acquisition in the broader context of the patent battle playing out across the tech sector, it makes sense for strategic reasons.

Certainly Google, Apple, and Microsoft are key competitors in this battle, and Google recently increased its portfolio size dramatically with the acquisition of 17,000 Motorola patents. Other players hold thousands of patents as well, topped out by IBM with 6,000+ new US patents in 2011 alone. Obtaining a huge chunk of patents and licenses in one move, saving time along the way, makes sense for broader reasons, and in this context it is hard to imagine it’s driven by anything related to Mozilla. Frankly, there are easier ways to influence the market without near the attention or the cost.

In this particular case, it would seem that the exposure is even lower because portions of the Mozilla code base are already licensed under some set of these patents. Early code contributions from Netscape to the Mozilla project came with patent licenses from Netscape/AOL via the Mozilla Public License. These licenses are still in play. For example, the first granted Netscape patent was for HTTPS as I recall. To the extent this is implemented in the Firefox browser or Thunderbird code bases by Netscape/AOL (and subsequently the Mozilla code base) patent grants would flow with the code under the MPL. The express MPL patent grant, which didn’t exist in other open source license at the time, finally sees its day.

Overall, while this acquisition is certainly surreal for many Mozilla folks that worked at Netscape including those who are inventors for some of the patents, I don’t view this as a threatening move in and of itself. Patent holders like Microsoft and Google are generally considered more predictable, subject to market and ecosystem pressures, and more often than not, targets of patent litigation themselves. That being said, Yahoo did sue Facebook, so conventional wisdom may no longer apply these days.

I believe the real threat is what ultimately happens with the patents. If Microsoft maintains ownership of the patents, on the margins, it is better than having them sold off piecemeal to non-practicing entities, often called IP trolls. If they end up in the wild, it’s not a good thing. We will need to watch this carefully.

It would be great to see Microsoft express its intentions in this regard or put some protections around the portfolio if it transfers the patents. This could alleviate many of the concerns raised by the transaction.

What does the recent district court’s dismissal of Nero’s antitrust claim really mean? Perhaps, not too much. The Court dismissed Nero’s antitrust claim with leave to amend. This is a common procedural move when the Court needs additional factual information to validate that a statutory claim has been made. At this stage of a proceeding, the Court is not rendering decisions on the merits of the claim, only whether the pleadings themselves properly state a claim.

It seems the Court understands and accepts Nero’s antitrust legal theory. Otherwise, the Court would not have given Nero leave to allege additional facts supporting that theory. It seems that an amended complaint that adds specific patent expiration dates and examples of nonessential patents in the MPEG-2 patent portfolio of 900+ patents would be enough to carry the day.

As many of you may know, there are a number of initiatives around regarding prior art that all tackle the problem of software patents from different angles. Whether its Open Invention Network’s Linux Defenders, post issue P2P, or our own infant Prior Art Share project, each relies upon an underlying principle of cooperation. The fact is that the ultimate defense – the way to eliminate a patent – is via prior art. It’s no doubt harder, but permanent, like sunlight to vampires.

Non-infringement arguments work, but only for the specific implementation. Ofcourse when you’re the defendant, you’ll gladly take either, but the real challenge is finding good prior art and developing it into admissible evidence within the time constraints of an actual patent case with a tight trial schedule. It can both invalidate the claims and/or narrow infringement arguments. Even if you can’t invalidate, prior art can establish safe zones — you can’t infringe by practicing what was “known” prior to the invention.

Notwithstanding the various projects, imagine a world where an attack on one is an attack on all, and developers across multiple FOSS communities responded to a call to action, in a coordinated and organized fashion, to find relevant non-patented prior art in response to the assertion of a patent against a FOSS project. Something like a NATO pact, but workable and without all the politics. The global hunt for prior art would happen not after the 3rd or “N” settlement, but in the first instance. In such a setting, a potential plaintiff would have to carefully evaluate the risk of asserting its patent because if found invalid, the asset would be worthless, and the licensing/royalty game would be over. We did this once before years ago in the Wang v. Netscape patent case, and it worked. In response, developers provided a massive amount of prior art we would have never found on our own.

This theory is again in action, see Red Hat’s blog on the subject. If you want to contribute your knowledge on prior art related to the Tom Tom case (programs, documents, publications, prior to the date of the patent, that disclose the elements of the claims) they’re collecting prior art references here. Obviously, there are other long term techniques like defensive publications, advance tagging of software programs so prior art is found more easily, eliminating software patents via legislation, but in the short term, cooperation may be the most effective technique. For those interested, the network is already in place, and if you’d like to get involved let me know.

We’ve just begun a new project at Mozilla to create a tool that can help defend against invalid software patents. The project is currently sponsored by Mozilla and Emily Berger of the EFF. The problem is that when patents are asserted or enforced, it’s difficult, expensive, and time consuming to find the references (documents or other software/systems) that contain the elements of the asserted patent claims, also known as prior art. Finding prior art is often one of the key defenses to claims of patent infringement; however, this part of the process is archaic, subjective, resource intensive, and inefficient. The result is that valuable resources are diverted from innovation and R&D to non-productive patent defense costs (when I practiced as a patent litigator, no doubt I didn’t think it was non-productive). The harm goes beyond hard costs, even the mere specter of an infringement claim can stall and delay the adoption of technology and products, or impose additional costs in the form of royalties and damages that has the same effect.

This is great for the legal industry, but not so good for those who are defending against such claims. A key assumption underlying the project is that non-patented commercial and non-commercial software developments present a huge, and untapped, reservoir of prior art which software patents should be – and currently are not– tested against. There are many other good efforts to improve the patent process, some like the P2P project focused on improving the patent examination process, and others focused on changing the legal framework, such as the Patent Reform Act. These are good efforts, but there are other opportunities for improvement.